Showing posts with label GSE. Show all posts
Showing posts with label GSE. Show all posts

Friday, December 18, 2009

Fannie Mae and Freddie Mac Need More Government Aid

Fannie Mae and Freddie Mac Need More Government Aid

According to this Bloomberg article, Fannie, Freddie Overseer May Seek More Treasury Aid (Update2), the annual dividend payments owed by Fannie Mae and Freddie Mac (Government Sponsored Entities, or GSE's) to the US treasury exceed the total earned by both GSE's, and as a result, the GSE's are actually needing to borrow more bailout money from the US Treasury in order to pay the annual dividend payments they owe the US Treasury. Unfortunately, this sounds all to familiar. You cannot become a profitable company by borrowing more to pay your current debts. It is a recipe for more financial disaster. No doubt that this is all due to the incredibly high number of bad loans and foreclosures. The article states "Treasury and Federal Housing Finance Agency officials are also debating whether to lower the mortgage-finance companies’ dividend payments on their Treasury borrowings, according to these people, who requested not to be identified describing the internal deliberations. Fannie Mae and Freddie Mac, the largest sources of mortgage money in the U.S., have used $111.6 billion of their $400 billion in backup financing in less than a year. The companies say their 10 percent annual dividend payment, which comes to about $5 billion each, costs more than either have earned in most years and adds to their draws on Treasury." According to the article, the US treasury is considering reducing the GSE's annual dividend payments in order to prevent the need for another government bailout. This all seems like a lot of wasted time, energy and money to keep 2 insolvent GSE's from failing.

If you are a Middle TN homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Thursday, November 5, 2009

US Government Provides Funding For 95% Of Mortgages

US Government Provides Funding For 95% Of Mortgages

According to this article, Recent Developments in Mortgage Finance, in the October 26, 2009 edition of the Federal Reserve Bank of San Francisco newsletter, the US government (via Fannie Mae, Freddie Mac and Ginnie Mae) are now providing unprecedented support for the US housing market by "owning or guaranteeing almost 95% of the new residential mortgage lending."  In other words, the US government is currently providing the funding for 95% of all residential mortgage loans.  Therefore, when you hear that "the banks are starting to lend again", what is really happening is that the banks are operating as little more than glorified loan brokers by selling nearly all their loans to the federal government via Fannie Mae, Freddie Mac and Ginnie Mae (see the graph below courtesy of the FRBSF).


The article goes on to state "This shift in mortgage finance has had a profound impact on the types of borrowers receiving loans. In the fourth quarter of 2006, approximately 10% of originations in our sample were labeled by originators as "subprime." For the entire universe of mortgages, subprime loans are estimated to have made up about 20% of originations in 2006. By the first quarter of 2008, the subprime share was effectively zero. Since then, increased FHA lending—identified here by Ginnie Mae's share—has revived this segment of the market. After plummeting in early 2008, the share of borrowers with FICO credit scores lower than 660 has returned to just higher than 20%, the same share as when subprime securitization peaked in 2006. The collapse of nonconforming loan originations has had a particularly strong impact on the higher end of the market. The share of jumbo mortgages was nearly 9% at the peak in 2006. By the end of 2008, jumbo loans accounted for just 3% of new originations. Meanwhile, in another big shift, option ARMs made up about 6% of originations in the fourth quarter of 2006. By year-end 2008, option ARMs had vanished from the data set." What this means is that the US government has taken the place of the subprime lenders that went belly up due to making too many bad loans and that the US government, as a % of total loans made, is making just as many subprime loans as the now defunct subprime lenders did during the peak of the subprime feeding frenzy. In my opinion, the result of this will be more foreclosures and short sales which will cause massive losses that the US taxpayer has to ultimately pick up all because we refuse to tell people that they cannot afford to buy a home. Common sense has truly left this country.

The article concludes "With the vast majority of current mortgage lending now intermediated in some form by the GSEs, it will be difficult for the housing market to return to normal." What this means is that it is going to be nearly impossible for the housing market to be weaned off of artificial and unsustainable government support. The end result will be disastrous when the government "market proppping" is eventually discontinued. That is why I know for sure that the housing market is not recovering. What we are seeing is a mirage created by artificial artificial support. Even the mirage is not that pretty, so the reality is that much worse. The US housing market will continue to suffer for the next several years with the worst to come within the next 3 years.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage (due to losing your job, having your income reduced, illness, health problems, etc.), or your home is already in foreclosure, or you owe more than your home is worth, please contact me to discuss your options including loan modifications or short sales. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN. If you do need to short sell your home (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home), or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Friday, October 2, 2009

Fannie Mae and Freddie Mac Have Nearly 100,000 Foreclosures (REO's)

Fannie Mae and Freddie Mac Have Nearly 100,000 Foreclosures (REO's)

According to this HousingWire.com article, GSE REO Portfolio Near 100,000, according to 10-Q filings with the Securities and Exchange Commission (SEC), the total REO foreclosure inventory now held by government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac is almost at a combined level of 100,000 single-family properties. That is staggering, especially considering that foreclosures continue to pile up and the rate of new foreclosure filings exceeds the rate at which those properties are being sold (per my previous blog post this is partially a result of the banks holding back REO inventory).

According to the article, "Freddie’s portfolio is nearly 35,000 properties, while Fannie’s is closing in on double that figure at nearly 64,000. While the rate of growth in the two portfolios has declined, Freddie acknowledges it expects to experience further losses from REO properties." The SEC filing stated “While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended.” According to the article, "Fannie’s REO portfolio nearly doubled from the first half of 2008 compared to H109. Fannie held 33,729 properties during H108. The number of properties increased in all regions of the US except the Midwest, which experienced a decrease from 15,265 to 14,626 properties." The article stated that Freddie Mac indicated that their pool of Alt-A interest-only loans and loans made in 2006-2007 make up the biggest share of its portfolio. These types of loans are now major contributors to the declining quality of the Freddie Mac loans. It appears that the continuing decline in home values is the main culprit. As I have stated in previous blog posts, as home prices decline and homeowners become "upside down" or "underwater" the number of delinquencies, short sales and foreclosures increase.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.
  • Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
  • Williamson County Tennessee: Brentwood TN and Franklin TN
  • Davidson County Tennessee: Nashville TN and Belle Meade TN
You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.